This is a proposal to estimate the relative profitability of the different casetypes in Minnesota's prospective case-adjusted reimbursement system for nursing homes, and to investigate whether relative profitability has had an effect on access to nursing home care. Case-mix prospective reimbursement rates may differ from marginal costs for several reasons discussed in this study. Specifically, in Minnesota's system, the case mix portion of the payment rates is largely based on the lagged historical costs of a particular nursing home, therefore marginal costs may differ from marginal revenue due to: group-determined reimbursement limits; the lag period; or variation of the 74% of total costs which are assumed not to vary with case mix. If differences in relative profitability occur and if there are bed shortages in certain areas of a state, low profitability casetypes may experience access problems because other casetypes are more profitable. This could mean that an absolutely profitable case type might not be admitted if they are relatively the least profitable of all case types. We plan to use Minnesota data from five years to estimate an (average) annual total cost function, from which we will calculate marginal cost. Because of Minnesota's complicated case-adjusted reimbursement system, we will estimate an (average) annual total revenue function from which we will calculate marginal revenue. We will compare marginal revenues with marginal costs to determine whether and where profitability differences occur. If differences in profitability occur, we will then identify the unprofitable or least profitable casetype, and compare the number of nursing home patients in this category over time. A diminishing secular trend in the volume of this casetype may reflect access problems, although there could be other explanations. Knowledge that differences in marginal profitability occur may have other implications. For example, profitability differences might indicate need for adjustments either in relative case mix weights or in the scope of costs included in the case based rates. This research also represents an advance in the theoretical cost function literature because our cost function will better gauge the impact of temporary changes in outputs on costs.